Spanish socialists: oil would cost $29 without the war in Iraq

[NV1962]

I thought this might be of interest, as it highlights a dimension of the war in Iraq that doesn't get much press coverage regarding that unilateralist and neo-colonial war: its devastating impact on the global economy. Today (Saturday, Aug 14) the parliamentary representatives of the Spanish social democrats (PSOE) released a report on the causes and effects of the massive increases in oil prices. E.g.: between March 2002 and August 2004, prices doubled from $23 per barrel of Brent to $44 (see also http://edition.cnn.com/2004/BUSINESS/08/14/oil.price/)

The following is my translation of the article in Spanish:

According to Spanish socialists, oil would cost $29 without the war in Iraq

A report of the Parliamentary representatives of PSOE denounces the increasing impact of the conflict on oil prices

Madrid, August 14, 2004

The war in Iraq has increased oil prices by 25 to 30% - in fact, if that conflict hadn’t taken place, a barrel of crude would cost between $29 and $30, according to a report issued (today) by the parliamentary Socialists.

This is one of the key conclusions of a report titled “Analysis of the causes and effects of the increase in oil prices – the impact of the war in Iraq,” that was presented today by the secretary general (comparable to the majority whip in the U.S.) of the Socialists, Diego López Garrido, and the vice secretary general, Francisco Fernández Marugán.

According to Fernández Marugán, this situation will impact on the Spanish economy by slowing its growth “by a few points” compared to the Government’s (initial) forecast for this year of 2.8%, as it is developing “less linearly as expected” and now is projected at “between 2.6 and 2.8%” at the end of this year.

According to that report, the oil market was balanced one year and a half ago, with supply meeting global demand.


THE WAR IN IRAQ

However, the crisis of Yukos – the Russian production company – together with the uncertainty about the situation in Venezuela and the outcome of the upcoming referendum there, the increase in demand of emerging economies such as India, China and India, and, above all, the war in Iraq have “distorted” the oil market and caused it to reach historic high prices.

The secretary general of the parliamentary socialists, Diego López Garrido, reminded that between March 2002 and August 2004 the price for a barrel of Brent oil doubled, from $23 to the $24 reached yesterday (Friday.)

According to López Garrido, the primary cause of this increase is the war in Iraq that is responsible for 25% to 30% of the price hike. He called that conflict “one of the biggest political stupidities of the Bush administration that was so enthusiastically supported by (former Spanish prime minister) Aznar.”

In fact, the study points out that Iraq produced 35% less oil in 2003 than the previous year, a situation that will last “for many months” due to the instability in that country and the acts of sabotage carried out against the Iraqi oil production facilities and pipelines.


SALVAGING PEACE

According to Fernández Marugán, in order for oil prices to reach normal levels, Iraq must regain the peace and Western countries must “show confidence to rebuild the damage in the (oil) sector.”

Until then, Fernández Marugán said, Spain will have to spend more of its resources on the import of oil and “it will impoverish a bit.” Also, the oil production costs will increase, the Spanish economy will grow at a slower rate than it did until now, and it’ll need more time to absorb the “general increase in prices” of all products.

Fernández Marugán points out that, according to some analysts, if oil prices in 2004 (on average) are at a level of $37 per barrel, prices will increase between one and two points above forecast, and GDP in 2005 will be 3 points lower than previously foreseen.


CONSENSUATED MEASURES IN EUROPE

The PSOE party official said that Europe should propose political measures to stabilize the Middle East as well as prepare economic measures to counter the negative effects of the oil price hike, such as improving competitiveness of less active (economic) sectors and reducing the oil dependency of the Spanish economy.

In this regard, López Garrido reiterated that the Spanish government “won’t act alone or adopt any measure without counting on Europe” because all of the measures that could be implemented “cross the bounds of European laws that govern (free) competition.”

That is why he stressed that the Spanish government will wait until the Ecofin<1> has analyzed the situation and proposes solutions that are “common and for all.”

Nonetheless, the socialist congressman acknowledged that mayor efforts must be made, that renewable energy sources should be pursued more, and that energy consumption must be rationalized.

August 14, 2004 – EFE news agency

_____

<1> The "Ecofin" is the regular meeting of government ministers of Finance and Economic Affairs (comparable to the Secretary of Treasury in the U.S.) of all E.U. countries, usually held in Brussels. Those meetings serve to discuss and determine common economic policies for all E.U. member countries.

[movonne]

1. Good article.

[HysteryDiagnosis]

2. Send a bill

to shrub and company. It's only fair.

[NJCher]

3. ah but then we wouldn't get to feed the "defense" industry

thanks for the translation, NV1962. I like to print out articles like this and mail them to friends and family in the midwest, where they don't get to see such information.


Cher

[indepat]

4. An extra $10 to $20 per barrel is such a small price for bringing liberty

and democracy to the Iraqi people.